QUESTION: What's your take on the
Multilateral Agreement on Investment?

CHOMSKY: It's disastrous. It's a major attack on democracy, even on
markets and trade. It would transfer decision-making, to an
extraordinary extent, into the hands of unaccountable, private
imperatives. And that's why the negotiations for it were conducted in
secret. ...

The MAI would eliminate virtually any democratic social and
economic planning. For example, suppose Colorado decided to pass laws
for consumer protection requiring investors to look to privilege
depressed areas for economic development. Under the MAI, any such laws
would be banned. Massachusetts, for example, has a law barring
investment in Burma -- that would be banned. In fact, just about all
the things that any community might do to try to make investment
worthwhile for the community and not just for the investor (would be
banned). Furthermore, corporations would have the right to sue
governments, which has never been allowed in the past. It's sort of
allowed under NAFTA. But they would be allowed to sue governments,
from the federal on down to the local level, if there was any
infringement on their right to do anything they feel like. These suits
would not be in court, they're in private appeal panels which are made
up of trade experts, meaning basically representatives of
corporations. There's no rules of evidence, they are secret and there
is no appeal process. The rulings are made by "trade experts" which
are basically corporate representatives.

Of course these (litigation) rights are not reciprocal. All
obligations in the MAI fall upon governments, communities and so on.
No obligations fall on corporations.

QUESTION: What are the forces behind the MAI?

CHOMSKY: They involve the OECD (the Organization of Economic
Cooperation and Development), representing the governments of the
richest countries, which was trying to ram it through. ... The groups
behind it were the major power centers of the world: the powerful
government-states, the transnational corporations, the international
corporate sector and the international bureaucracies like the
International Monetary Fund and so forth. ... The international
organizations of U.S. business were involved directly. In fact, the
U.S. Council on International Business already had a publication on it
back in January 1996, which they were circulating to their corporate
membership. The USCIB requested -- which amounts to a demand -- that
the Clinton Administration make the MAI a central part of fast track
(the temporarily failed bill endowing the president with trade
negotiating authority and limiting Congress to a "yes" or "no" vote),
even before the legislation was produced. The White House backed off
because they were afraid of the publicity.

QUESTION: You've emphasized the involvement of national governments
within this process, but isn't that ironic given the fact that the MAI
severely undermines the sovereignty of nation-states?

CHOMSKY: That's on purpose. The leaders of the national governments
want to undermine their sovereignty. Remember what a government is.
It's not a government of the people. It's a government of powerful
interests. This was made dramatically clear in an interchange between
the White House and Congress which the press refused to publish. Last
November, 25 congressional representatives sent a letter to the White
House saying that "it has come to our attention -- due to the efforts
of activist groups -- that this treaty (the MAI) has been under
negotiations for three years," and they asked a couple questions. One
question was, how is it possible that the White House is claiming that
they need fast track to be able to negotiate trade agreements, and
here's a huge trade agreement they've been intensively negotiating for
three years without fast track? Secondly, how is it possible that,
given that under the constitution Congress has exclusive control over
questions of international commerce, the Clinton Administration had
been doing it without even notifying Congress? And third, they went
into some of the wording of the treaty and pointed out that it grants
corporations rights which are far beyond what U.S. law grants them,
and that in fact undermines U.S. sovereignty. A couple of months later
they got an answer, which is the kind of answer that you would get if
you wrote a letter to the White House -- "Thank you for your letter,"
and it said nothing. In fact they did issue a formal statement last
February, and it was a very interesting statement. It didn't say much
but it did say that "we are being very careful to insure that all of
our domestic constituencies are actively involved in the process." And
that's a very interesting phrase. Who are the "domestic
constituencies" that are involved? Well it's not Congress, they had
never heard of it. It's not the public, they've been kept out of it
totally. The "domestic constituencies" that they're referring to are
the U.S. Council on International Business. That's what the White
House is telling us in a very crude form. Who are they the government
of? People ought to pay attention. Their power rarely reveals its
position. That's why I would describe it not as ironic, but rather
perfectly natural. ...

If we go back to the Bretton Woods system again, back to 1944, one
of the reasons that they gave for requiring regulation on capital
flows was what is sometimes called the "incompatibility thesis" by
international economists. That thesis states that liberalization of
capital tends to undermine free trade, because capital flows make very
volatile markets, and makes it much harder for trade to take place. In
fact, the natural reaction to freeing up capital is increased
protectionism, and incidentally that's what has happened since the
early 1970s. So this is not a period of free trade, it's a period of
greater regulation of trade. The United States is extreme in this
regard. The Reagan Administration broke all records in closing off the
U.S. markets to foreign exports. They doubled the protectionist
barriers in comparison to any post-war administration. That was a
global phenomenon and it's well known among economists. And that is
undoubtedly an illustration of the truth: As capital is liberalized,
trade growth slows.

QUESTION: What was the nature of the grass roots effort opposing
the MAI?

CHOMSKY: It actually started in Canada. There the activism was so
strong that it broke into the national media. So for about a year in
Canada it's been all over national television, the main-stream press
and so on. And it never crossed the border, which is interesting.

In January 1997, someone (at the OECD) -- they won't say who -- in
Paris leaked a draft treaty which the OECD wanted to keep secret, to
grass-roots organizations. It was immediately put up on the Internet
and at that point a number of organizations started getting actively
involved in trying to circulate it. ... In the United States, there
was first a little public interest foundation in Washington called the
Preamble Foundation, and I got my copy of the treaty from them
initially. Then Public Citizen got involved, and there's an
international forum on globalization which is involved, as well as a
lot of the environmental organizations -- Friends of the Earth, the
Greens. Pretty soon it just sort of spread its way through this whole
network of organizations. A lot of non-governmental organizations were
opposed, and they were able to compel the OECD to let them have a say
at the OECD meetings last October. They had a press conference
afterwards which none of the press covered. But at that point even the
United States (representatives) didn't want it signed. It was just
getting to be too hot an issue. They don't want people to know what
they are doing, that's why it is in secret. That's why the major press
wouldn't cover it. But it was just breaking out.

The point is that activism got so strong that the OECD sort of
backed off. That's a pretty impressive achievement. ... Keep in mind
that (in the U.S.) fast track was defeated. And that's another
important popular victory. Because, as the government pointed out,
fast track authority is conventional-just about every other president
had it. And the reason was (because there) wasn't enough popular
opposition. Now there is. What the press ought to have on the front
pages is that (the failure of MAI and fast track) are tremendous
victories for popular activism against extraordinary odds. Those are
hopeful signs, and that's why they're not being reported. They don't
want to encourage democracy.

QUESTION: Was popular activism the prime factor in stopping the MAI
push?

CHOMSKY: There were other issues, I should say. A lot of different
countries introduced what they call "reservations" to protect
something that they wanted to protect. We can't really know in detail
what (the reservations were) because it was secret. But there is no
doubt that France and Canada introduced reservations to try to protect
their cultural industries. The U.S. has different laws that would be
threatened. For example, foreign ownership of the U.S. press is
barred. Also the Helms-Burton Act is in radical violation of the WTO
rules, and has been condemned by just about everybody. It's been
declared illegal by the Organization of American States. And
(Helms-Burton) would be totally inconsistent with the MAI, so the U.S.
was trying to introduce reservations to permit it to continue these
illegal activities.

CHOMSKY: Because it's big news. I mean, they knew perfectly well
that the public is going to hate it. So they wanted to keep it secret,
and keep it to what they call the "domestic constituencies" -- the
international business community. The mainstream press is simply part
of the corporate sector, that's not a secret, after all. I mean what
is the New York Times? It's a huge corporation. The press is
just one arm of the corporate sector. Well, the whole corporate sector
doesn't want the public to know about it. They sometimes tell you why.
For example, when fast track was running into trouble, the Wall
Street Journal ran an article saying this is terrible, we've got
to get it through, and they said the critics (of fast track) have what
they call the "ultimate weapon," which is that the public is opposed
to it. They've got to keep the "ultimate weapon" silent. And the best
way to keep them silent is not to tell them anything. Why does the IMF
operate in secrecy? Well, that's why.

QUESTION: Is the MAI dead in the water?

CHOMSKY: No, it's not. In fact it's been interesting to read the
wrap-ups in the international financial press. And they say "look, we
lost at the OECD, but we'll sneak it in some other way." Right now
there's a fight going on in Congress because the Clinton
Administration is trying to get the IMF to change its charter, and
there is opposition to that. Gephardt and some of the Democrats have
proposed a resolution just in the last few days to try to bar this.
But that is part of the effort to get around the OECD.